Takhar v Commissioner of State Taxation - [2020] SASC 119

Supreme Court of South Australia
(Land and Valuation Division)
TAKHAR v COMMISSIONER OF STATE TAXATION
[2020] SASC 119
Judgment of The Honourable Justice Blue
30 June 2020
TAXES AND DUTIES - LAND TAX - OBJECTIONS AND APPEALS
TAXES AND DUTIES - LAND TAX - EXEMPTIONS - PRIMARY PRODUCTION LAND
Taxation appeal following disallowance of an objection to a land tax assessment in respect of land at Burton and Lewiston on the ground that the land was exempt from land tax under primary production exceptions contained in the Land Tax Act 1936.
The appellants have since 1993 owned 8 hectares of land at Lewiston the subject of three certificates of title (lots 51, 52 and 53) and since 1991 owned 19 hectares of land at Burton. They have also since 1982 and 1985 owned 21 hectares and 30 hectares of land at Gawler respectively, which they have used for raising chickens for meat and growing crops, and since 1993 they have owned 32 hectares of land at Mallala, which they have since about 2004 used for growing crops.
The Lewiston land was used for egg production (along with Mallala) until about 2004. Since then, lot 53 has been sown with crops from time to time; lot 51 has been let to tenants; and lot 52 has been largely vacant. The Burton land has been used from time to time for cropping.
The respondent issued a notice of assessment of land tax in respect of the Lewiston land for the years ended 30 June 2010 to 30 June 2014 and the Burton land for the year ended 30 June 2014.
Held:
1. Lot 53 was used for the business of primary production at the relevant times and was thereby excepted from land tax (at [264]).
2. Lots 51 and 52 were not used for the business of primary production at the relevant times and were liable to land tax (at [270] and [273]).
3. Lots 51, 52 and 53 comprise separate parcels of land for the purpose of the primary production exception (at [288]).
4. The Burton land was used for the business of primary production at the relevant time (at [356]).
5. The first appellant was engaged on a substantially full time basis in a relevant business for the purpose of the primary production exemption in respect of the Burton land (at [367]).
6. The Burton land was eligible for exemption from land tax (at [368]).
7. Appeal allowed. Assessment set aside. The parties to be heard on a substituted assessment in respect of lots 51 and 52 (at [372]).
Development Act 1993 (SA) s 37(4); Environment Protection Act 1993 (SA); Land Acquisition Act 1969 (SA) ss 10, 16; Land Tax Act 1936 (SA) ss 2, 4, 5, 7, 9, 14; Real Property Act 1886 (SA) ss 51E, 223LA, 223LB, 223LE, 242; Taxation Administration Act 1996 (SA) ss 82, 88(4), 92, 96, 97, 98, referred to.
Commissioner of Land Tax v Christie [1973] 2 NSWLR 526; Commissioner of State Taxation v T & S Liapis Pty Ltd [2015] SASCFC 151; Lotus Projects Pty Ltd v Commissioner of State Revenue [2017] VSC 63; Penrith Rugby League Club Ltd v Commissioner of Land Tax [1983] 2 NSWLR 616; Saville v Commissioner of Land Tax (1980) 12 ATR 7; T & S Liapis Pty Ltd v Commissioner of State Taxation (2015) 124 SASR 1, considered.

TAKHAR v COMMISSIONER OF STATE TAXATION
[2020] SASC 119
Civil
BLUE J:

This is a taxation appeal[1] following the Minister’s disallowance of an objection to a land tax assessment. The appellants appeal on the ground that the land was exempt from land tax under primary production exceptions contained in the Land Tax Act 1936 (SA) (the Act).[2]
[1] Taxation Administration Act 1996 (SA) section 92.
[2] Land Tax Act 1936 (SA) sections 4(1)(l) and 5(1)(g).
The appellants Bhupinder Takhar (Bhupinder) and Jaswinder Takhar (Jaswinder) (collectively the Takhars) own 8.1 hectares[3] of land at Lewiston the subject of three certificates of title (collectively the Lewiston land) and what was originally 21 hectares,[4] and since June 2012 has been 19 hectares, of land at Burton (the Burton land).
[3] All areas in hectares less than 10 hectares are rounded to the nearest tenth of a hectare unless otherwise shown.
[4] All areas in hectares over 10 hectares are rounded to the nearest whole hectare unless otherwise shown.
The Takhars also own 21 hectares and 30 hectares of land at Gawler, which they use for raising chickens for meat and growing crops. They own 32 hectares of land at Mallala, which they have previously used for egg production and growing crops and now use for growing crops and letting to tenants.
In September 2014, the respondent Commissioner of State Taxation (the Commissioner) wrote to the accountant for the Takhars enclosing a notice of assessment of land tax in respect of the Lewiston land and the Burton land for the year ended 30 June 2014 totalling $162,136[5] and arrears of assessments in respect of the Lewiston land for the years ended 30 June 2010 to 30 June 2013 totalling $6,512.
[5] All dollar figures referred to herein are rounded to the nearest whole dollar unless otherwise shown.
The Takhars lodged an objection against the assessment,[6] claiming that they were entitled to an exemption in respect of the Lewiston land under section 4(1)(l) of the Act (the primary production exception) and in respect of the Burton land under section 5(10)(g) of the Act (the DRA primary production exemption). The Treasurer and Minister for Finance determined the objection,[7] confirming the assessment. The Takhars appeal following the Minister’s determination.
[6] Taxation Administration Act 1996 (SA) section 82.
[7] Taxation Administration Act 1996 (SA) section 88.
The Takhars’ case is that the Lewiston land was excepted from land tax by section Section 4(1)(l) of the Act because at the relevant times it was used for the business of primary production by way of growing crops.
The Takhars’ case is that the Burton land was eligible to be exempted from land tax under section 5(10)(g)(ii) of the Act because at the relevant time it was used for the business of primary production by way of growing crops and Bhupinder was engaged on a substantially full-time basis in a relevant business and Jaswinder is a relative of Bhupinder.
Background
Chronological narrative
Bhupinder and Jaswinder were born in India in 1948 and 1950 respectively.
In 1964 the Takhars emigrated to Australia with their parents and older brother, living in Brisbane.
In 1972 the Takhars’ father purchased an eight hectare chicken farm at Thornlands in Queensland (Thornlands 1) on behalf of the Takhars and himself and they commenced a chicken meat production business in partnership (the three way partnership). Bhupinder and Jaswinder worked in this business while undertaking university degrees.
In 1974 and 1976 respectively Bhupinder and Jaswinder were awarded a Bachelor of Applied Science (Poultry Technology) from the Queensland Agricultural College.
In 1976 the Takhars purchased a 16 hectare farm at Thornlands in Queensland (Thornlands 2) and commenced a chicken meat production business in partnership under the name BS and JS Takhar (the partnership or the Takhar partnership). They worked in this business while undertaking university degrees.
In 1979 Bhupinder was awarded a Master of Science in Agriculture from the University of New England. Jaswinder was awarded a Bachelor of Commerce from the University of Queensland.
In 1979 Bhupinder moved to Adelaide and commenced employment with Red Comb Egg Cooperative Society Limited as an animal nutritionist, advising on feed, husbandry and health.
In 1982 the Takhars purchased a 21 hectare farm at Nottle Road and Clancy Road Gawler Belt (Gawler 1) and commenced a chicken meat production business on the land. This property has always been treated under the Takhars’ ownership as excepted from land tax under the primary production exception.
In 1982 Bhupinder resigned his employment with Red Comb and commenced working full-time in the Takhar partnership business, focusing on the business at Gawler 1.
The Takhar partnership sold the chickens it produced in South Australia to Manos Poultry.
In 1983 Jaswinder was awarded a Master of Business Administration from the University of Queensland.
In about 1984 the Takhars commenced using land at Gawler 1 not dedicated to chicken production for cropping. The cropping was undertaken under a share-farming arrangement with Dean Modra.
There are two common forms of share-farming arrangement. Under one form, revenue is divided on a 50/50 basis, the operator provides the labour and equipment, and the cost of materials (such as seeds, fertiliser and spray chemicals) is divided on a 50/50 basis. Under the other form, revenue is divided on a 70/30 basis and the operator provides the labour and equipment and bears 100 per cent of the cost of materials. The share-farming arrangement between the Takhars and Mr Modra and later Mr Krieg was of the latter form.
In 1985 the Takhars purchased a 30 hectare farm at Ward Belt Road Ward Belt (Gawler 2) and commenced a chicken meat production business on the land. They used land not dedicated to chicken production for cropping under the share-farming arrangement with Mr Modra. This property has always been treated under the Takhars’ ownership as excepted from land tax under the primary production exception.
Mr Modra subsequently moved to Kangaroo Island. Malcolm Lucas took his place for a short period (probably one year). Robin Krieg took his place. Mr Krieg has undertaken share-farming with the Takhars since that time.
Mr Krieg has undertaken cropping on all of the Takhars’ properties in South Australia, with the exception of Angle Vale.
In 1988 Jaswinder was awarded a Certified Public Accountant Certificate and commenced employment in a public accounting firm. He was also responsible for managing the Takhar partnership business in Queensland. He became a Certified Practising Accountant in 1991.
In about 1989 the Takhars commenced growing orchids on some of the land at Gawler 2. Orchid production ultimately reached 20,000 plants per year.
In 1992 June Traeger commenced employment by the Takhars as the manager of the orchid nursery at Gawler 2.
In December 1991 the Takhars purchased the Burton land at 35-57 Heaslip Road Burton (21 hectares). They purchased it with the intention of raising chickens because it was across the road from land owned by John Manos of Manos Poultry, who was planning to expand his poultry activities. The Burton land had previously been used for grazing sheep and some cropping. At that time, all of the land on the same side, and most of the land on the other side, of Heaslip Road was used for primary production. However, the Takhars subsequently discovered that chicken farming was not permitted by the zoning of the land. Details of the actual and intended use of the land are in dispute and are addressed below.
The Commissioner’s office (Revenue SA) allocates an owner number to owners of property in South Australia. The owner number 05689556 was allocated to the Takhars. Revenue SA also allocates assessment numbers to property in South Australia. The assessment number 4432755018 was allocated to the Burton land. Mr Olsen of the Commissioner’s office produced a printout from Revenue SA’s STORMS computerised management system that dates back to 2001 (the STORMS printout).[8] It shows that the Burton land was treated as exempt from land tax as at 2001. I infer that it was treated as exempt from land tax since it was acquired by the Takhars in 1991.
[8] I infer that Revenue SA used a different management system before 2001.
In July 1993 the Takhars purchased a 32 hectare farm at 1139 Redbanks Road Reeves Plains (Mallala) and commenced a chicken egg-laying and pullet production business on the land. They had two egg-laying sheds and one growing shed. They had 18,000 egg-laying chickens at any one time. They also used land not dedicated to chickens for cropping. This property has always been treated under the Takhars’ ownership as excepted from land tax under the primary production exception.
In July 1993 the Takhars purchased the Lewiston land which then comprised lot 479 known as 162 Hayman Road Lewiston (8.1 hectares) and commenced a chicken egg-laying and pullet production business on the land. They had five egg-laying sheds and five growing sheds. They had 12,000 egg-laying chickens at any one time. They also sold 20 week old chickens to other poultry farmers. They used land not dedicated to chickens for cropping. They used the house on the property as the manager’s house.
The STORMS printout suggests that the Lewiston land was treated as excepted from land tax at the apparent inception of STORMS as at 2001. I infer that it was treated as excepted from land tax since it was acquired by the Takhars in 1993.
In 1993 Ms Traeger’s husband Leslie commenced employment by the Takhars as the manager of the chicken and egg-laying activities at the Lewiston land. He also worked on other Takhar properties. The Traegers moved from their house at Evanston Park to live in the house on the Lewiston land. They remained in that house until June 1998, when Les stopped working for the Takhars and they returned to live in their Evanston Park house. June continued to work as manager of the orchid farm at Gawler 2 until 2005.
In 1993 the Takhars purchased a 2 hectare farm at Angle Vale (Angle Vale). They had previously been leasing it from the owner. They used it to mix feed for chickens on the partnership lands in South Australia and for mixing fertiliser for use on the orchids at Gawler 2.
In 1994 the Takhars engaged Bernold Glaser, a business consultant, of Glaser & Associates, to provide business advice in relation to their South Australian operations.
In 2003 or 2004 the Commissioner issued to the Takhars a notice of assessment of land tax in respect of the Burton land and Angle Vale for 2003/04. It is not clear what prompted the issue of this assessment.
In about 2004[9] the Takhars ceased egg production at Mallala and the Lewiston land due to a change in market conditions. They continued to use the land for cropping. At Mallala, they used one house to store equipment and rented the other house to tenants. At the Lewiston land, they rented the house to tenants. The detail of the use of the Lewiston land is in dispute and is addressed below.
[9] The evidence given was that egg production ceased in the 2003/04 financial year. For ease of reference, I treat this as being 2004. Nothing turns on the precise date.
In April 2004 the Takhars applied for primary production exemptions in respect of the Burton land and Angle Vale and, after some delay, produced their partnership and individual tax returns.
In October 2004 DRA primary production exemptions were granted in respect of the Burton land and Angle Vale by the Commissioner’s office, which wrote to Bhupinder informing him of the grant of the exemptions.
In July 2007 the Takhars lodged an application with the Registrar-General for the deposit of a plan of division to create three new allotments out of lot 479 Hayman Road Lewiston (being the Lewiston land). In 2007 the Registrar-General registered Deposit Plan 72899, thereby creating the following allotments:
·allotment 53 comprising 5.4 hectares being a battleaxe-shaped allotment comprising a road frontage of 19[10] metres extending 221 metres deep and then opening up into an area 143 metres wide by 349 metres deep (lot 53);
·allotment 51 comprising 1.3 hectares being a rectangular allotment comprising a road frontage of 59 metres with a depth of 221 metres (lot 51); and
·allotment 52 comprising 1.4 hectares being a rectangular allotment comprising a road frontage of 65 metres with a depth of 221 metres (lot 52).
[10] All lengths in metres are rounded to the nearest whole metre unless otherwise shown.
The three allotments are shown in the plan extracted from the deposit plan and contained on the certificates of title which is reproduced below:
The existing improvements on the Lewiston land were located as follows:
·the transportable house and garage, one poultry shed and three sheds used to store equipment were located on lot 51;
·two old poultry sheds and one other shed were located on lot 52; and
·four old poultry sheds, the burnt out remnants of a fifth poultry shed, and one other shed were located on lot 53.
Sometime after the subdivision, lot 51 retained the existing street address of 162 Hayman Road Lewiston; lot 52 did not acquire a street address; and lot 53 acquired a street address (variously) of 164 or 164A Hayman Road Lewiston.
In October 2007 the City of Salisbury (the Council) informed Bhupinder that it was investigating compulsorily acquiring land in the Burton region for a drainage scheme entitled the Burton West Drainage Scheme (the Drainage Scheme), including an open drain on part of the Burton land. The Takhars gave permission to a surveyor engaged by the Council to enter the land for the purpose of that investigation.
In about 2008 the Takhars’ father died. Thereafter they carried on the business at Thornlands 1 as part of the Takhar partnership.
In October 2008 the Council resolved that the Manager Property Services be authorised to commence the acquisition of required land for the Drainage Scheme and, if agreement could not be reached with affected landowners, to compulsorily acquire their land.
Sometime after the subdivision of the Lewiston land, the Commissioner’s office allocated assessment number 3101454400 to lot 51; assessment number 3101454056 to lot 52; and assessment number 3101454806 to lot 53.
In December 2008 the Commissioner issued to the Takhars a notice of assessment of land tax totalling $1,483 in respect of lots 51, 52 and 53 for 2008/09. Evidence was not adduced as to what prompted the issue of this assessment but I infer that it was the subdivision of the Lewiston land into three allotments.
In February 2009 Bhupinder applied to the Commissioner for a primary production exemption in respect of lots 51, 52 and 53. Ultimately in February 2010 the Commissioner’s office wrote to the Takhars declining to grant an exemption. An objection by the Takhars in June 2010 was determined adversely to the Takhars by the Treasurer in December 2010.
In November 2009 the Commissioner issued to the Takhars a notice of assessment of land tax totalling $1,966 in respect of lots 51, 52 and 53 for 2009/10.
In about 2009 the Council offered to pay to the Takhars $33 per square metre as compensation for the land within the Burton land that the Council was seeking to acquire for the Drainage Scheme.
The Takhars asked Mr Glaser to advise in relation to the proposed acquisition. Mr Glaser made enquiries and ascertained that the Council was paying up to $65 to $67 per square metre for land for the Drainage Scheme. Mr Glaser also ascertained that the sale price of land around the area ranged from $33 to $67 per square metre.
Bhupinder and Mr Glaser believed that the Council’s offer of $33 per square metre was inadequate and the Council should pay approximately twice that amount.
The Takhars and Mr Glaser agreed that the Takhars should lodge an application for development approval to subdivide the Burton land. It is in dispute whether this was or was not motivated by the proposed acquisition by the Council, which I address below.
The Takhars engaged Botten Levinson to advise in relation to initiating the process of applying for subdivision approval and using the hypothetical development method for valuation of the land the subject of the proposed acquisition by the Council.
Bhupinder gave evidence that in 2009 he observed a neighbour procure soil to fill a low-lying area of their farm and grow vegetables on the filled area. The Burton land contained a low-lying area in its south-western corner. Bhupinder advertised in The Advertiser newspaper for clean soil. He received many phone calls. Between July 2009 and April 2010 many tiptruck loads of soil were deposited in the north-western corner of the Burton land, resulting in a series of stockpiles generally between three and four metres in diameter and between 1 and 1.5 metres in height (the stockpiled soils).

The stockpiled soils mainly comprised soil excavated for the construction of swimming pools in the northern metropolitan area. There was also some illegal dumping of waste materials in this area. The Environment Protection Agency later estimated that the stockpiled soils contained approximately 50,000 cubic metres of soil. Reports by Soil & Groundwater Environmental Consulting (later known as JBS & G) (S&G) referred to below indicate that the quantity of concrete, plastics and other extraneous materials comprised approximately five cubic metres.
On 15 April 2010 Michelle Humphries (now Michelle Rowse) and Damon Curnow of the Environment Protection Agency (the EPA) happened to observe in passing the stockpiled soils on the Burton land. In due course, they formed the view that the Takhars were conducting a depot for the reception and disposal of waste within the meaning of clause 3(3) of Schedule 1 to the Environment Protection Act 1993 (SA) (the Environment Protection Act), which is illegal in the absence of a waste depot licence under that Act.
On 27 May 2010 the EPA issued an Environment Protection Order requiring the Takhars to cease the receipt of waste at the site and remove all waste from the site to an authorised facility (the EPO).
The Takhars engaged Finlaysons Lawyers to advise and act for them in relation to the EPO.
On 4 June 2010 Suzanne Dickey of Finlaysons and Bhupinder met with Ms Humphries and another EPA officer at the Burton land. Ms Dickey wrote a letter to Ms Humphries on 7 June 2010 confirming the conversation and requesting a variation of the EPO to enable an environmental assessment to be undertaken and environmental management plan to be prepared.
On 17 June 2010 the EPA issued a notice of variation of the EPO deleting the requirement to remove waste and instead requiring the Takhars to engage a qualified site contamination consultant to assess the site, provide a report on the assessment, prepare and submit to the EPA an environmental management plan and, following approval from the EPA, implement the approved environmental management plan and provide a verification report (the EPO variation).
Sometime between June and August 2010 Finlaysons on behalf of the Takhars engaged S&G to undertake the assessment and prepare the environmental management plan required by the EPO variation.
In July 2010 it was reported to the Council by the Senior Property Officer that negotiations with the owners of the Burton land [ie the Takhars] and with the owners of two other parcels of land on the same side of Heaslip Road Burton had to date been unsuccessful and the owners of those three parcels asserted that the Council’s valuation amounts were approximately half what they should be. The Council resolved to delegate to its Chief Executive Officer the powers amongst others to serve notices of intention to acquire land under section 10, and to publish a notice of acquisition of land under section 16, of the Land Acquisition Act 1969 (SA) (the Land Acquisition Act) for the purpose of the Drainage Scheme.
In about August 2010 the Commissioner’s office commenced a review of the DRA primary production exemption granted in October 2004 in respect of the Burton land and Angle Vale. Reviews are conducted approximately every 5 years in respect of DRA primary production exemptions. Thomas Olsen, a Taxation Officer within the Assessment Team at Revenue SA, was the person responsible for the review. In February 2011 Mr Olsen was promoted to Team Leader of the Assessment Team. Mr Olsen had by January 2010 assumed responsibility for land tax matters involving the Takhars (including in particular in relation to the Lewiston land).
In September 2010 the Takhars applied for development approval to subdivide the Burton land into 66 allotments (the development application).
In October 2010 the EPA issued a notice of variation of the first EPO variation extending the dates for compliance with the EPO variation. I refer to the original EPO variation as varied in October 2010 as the EPO variation.
In October 2010 the Commissioner issued to the Takhars a notice of assessment of land tax totalling $1,333 in respect of lots 51, 52 and 53 comprising the Lewiston land.
In November 2010 the Council issued to the Takhars a notice of intention to acquire part of the Burton land pursuant to the Land Acquisition Act. The land proposed to be acquired was described by reference to shaded areas on a plan prepared by Michael Grear Surveys (the Grear plan). For the purpose of describing the Burton land, I assume for ease of reference that Heaslip Road runs north-south. The land proposed to be acquired represented a rectangular section running along the entirety of the eastern boundary of the land and being 35 metres wide and 415 metres long on the inner side together with a rectangular section running along the eastern half of the southern side being 35 metres wide and 168 metres long on the inner side. The land proposed to be acquired is shown on the Grear plan reproduced below:
On 10 December 2010 S&G prepared a final version (revision 2) of a Stockpile Classification report on their assessment of the stockpiled soil at the Burton land. They reported that they had undertaken the first three of five stages. These three stages were identifying and grouping similar materials, initial classification of similar materials and further analysis of identified hotspots. The remaining stages were preparation of an environmental management plan and implementation of agreed actions. They reported that they had grouped the stockpiled soil into 10 zones of similar materials, designated A to E and G to K. Six zones complied with the standard for waste fill and some of the samples taken from four zones contained arsenic (and one zone also zinc) in excess of the standard.
At some point, the Council offered to pay to the Takhars $380,000 for the part of the Burton land proposed to be acquired. The Council had obtained a valuation from a valuer of the land proposed to be acquired (that was not tendered) and I infer that the offer was in accordance with the valuation.
The Takhars obtained a valuation from a valuer of the land proposed to be acquired by the Council on the assumption that its highest and best use was being subdivided into multiple allotments. The valuation was not tendered but evidence was given that it was much higher than the valuation obtained by the Council.
In October 2011 the Commissioner issued to the Takhars a notice of assessment of land tax totalling $1,546 in respect of lots 51, 52 and 53 for 2011/12.
In June 2012 the Council published in the Gazette a notice of acquisition of 2.1 hectares of land along the eastern boundary and the eastern half of the southern boundary of the land (the Diment Road land). Pursuant to section 16 of the Land Acquisition Act, in May 2012 the Council served on the Takhars an offer of compensation of $638,000 for the value of the land plus $30,000 for disturbance. The total of $668,000 was paid into this Court. The Takhars considered that this offer was still inadequate, but ultimately accepted it some years later.
In June 2012 Bhupinder asked Steven Kirsanovs, of Kirsa Environmental, to provide a costed proposal to provide a site contamination audit report in relation to the stockpiled soils on the Burton land. On 4 June 2012 Bhupinder met with Mr Kirsanovs on site at the Burton land.
In November 2012 the Takhars engaged Mr Kirsanovs to undertake work for and prepare a site contamination audit report.
In November 2012 the Commissioner issued to the Takhars a notice of assessment of land tax totalling $1,827 in respect of lots 51, 52 and 53 for 2012/13.
On 18 January 2013 S&G prepared revision 4 of an Environmental Management Plan setting out a staged approach to facilitating the reuse of the stockpiled soils as bulk fill entitled “Finlaysons Burton EMP Rev4 180113”. This report was not tendered but was referred to in S&G’s subsequent report dated June 2013.
In May 2013 the Council rejected the Takhars’ development application in respect of the Burton land because they had not responded to requests from the Department of Planning, Transport and Infrastructure for information concerning roads.
On 28 June 2013 S&G prepared a draft “Environmental Site Assessment - Phase 1 (Site History)” report on their assessment of the stockpiled soil at the Burton land. On 30 January 2015 S&G issued a final version of this report.
On 19 August 2013 S&G prepared revision 1 of a Sampling, Analytical and Quality Plan Phase 2 Environmental Investigations report at the request of Mr Kirsanovs. The report set out a proposed program for analysis of soil and groundwater on the Burton land as a prelude to the reuse of the stockpiled soils as bulk fill.
In August 2013 the Commissioner decided to remove the DRA primary production exemption in respect of the Burton land and the Diment Road land.
In November 2013 the Commissioner issued to the Takhars a notice of assessment of land tax for 2013/14 for $19,606 in respect of the Lewiston land, $143,094 in respect of the Burton land and $3,320 in respect of the Diment Road land.
In November 2013 Mr Glaser wrote to the Commissioner’s office contending that the Lewiston land and Burton land were used for primary production. In June 2014 Bhupinder sent to the Commissioner’s office an application for primary production exemption for the Burton land.
On 20 June 2014 Mr Kirsanovs conducted a site inspection of the stockpiled soil at the Burton land in company with Bhupinder and Zoee Dolling of S&G.
In July 2014 the Commissioner’s office realised that the Diment Road land was not owned by the Takhars but rather was owned by the Council. As a result, the Commissioner issued a substitute notice of assessment of land tax for 2013/14 for $19,538 in respect of the Lewiston land, $142,597 in respect of the Burton land and arrears of land tax for 2009/10 to 2012/13 in respect of the Lewiston land.
On 26 September 2014 the Commissioner’s office wrote to Mr Glaser stating that the application for a primary production exemption in respect of the Burton land was refused and enclosing a copy of the July 2014 notice of assessment.
On 27 November 2014 Bhupinder lodged a notice of objection to the July 2014 notice of assessment attached to the letter of 26 September 2014. The parties in this appeal have treated the July 2014 assessment as assessing land tax for 2013/14 in respect of the Lewiston land and Burton land as well as for 2009/10 to 2012/13 in respect of the Lewiston land notwithstanding that earlier notices of assessment were issued.
On 30 January 2015 S&G prepared revision 2 of an Environmental Site Assessment – Phase 2 – Baseline Soil and Groundwater Assessment report. The report concluded that the stockpiled soil met the criteria for classification as Intermediate Waste Soils and the more general analysis of soil and groundwater on the Burton land indicated that it was appropriate to use the stockpiled soil as bulk fill. The report stated that there were some minor inclusions of oversize inert materials, being concrete and PVC pipe, but they could be satisfactorily managed.
On 6 August 2015 S&G prepared a Site Management Plan. The Plan provided for the stockpiled soils to be spread by an excavator or bulldozer on site between 300 and 500 millimetres thick. These were to be inspected for oversize material (greater than 100 millimetres in diameter or length). The oversize material was to be removed. It was expected that the oversize material would be less than 10 cubic metres in total. The oversize material was to be recorded and disposed of in accordance with EPA requirements. The process was to be validated by an environmental consultant, who was to prepare a summary report to the EPA and the auditor.
On 2 September 2015 the Treasurer and Minister of Finance determined to disallow the Takhars’ objection dated 27 November 2014 and confirmed the Commissioner’s decision.
On 1 September 2016 the Takhars filed an appeal against the disallowance of the objection.
In October 2016 a contractor engaged by the Takhars levelled and spread the stockpiles on the Burton land. In November 2016 and May 2017 a total of approximately five cubic metres of concrete, bricks and plastic were removed from the stockpiled soils and disposed of at Adelaide Resource Recovery.
By January 2017 the Takhars had decided to cease growing orchids at Gawler 2 due to a change in market conditions.
In January 2017 the Takhars engaged Dr Paul Barber to provide a report about the apparent use of the Lewiston land and the Burton land based on Google Earth and Near Map aerial images and some landscape photographs.
On 20 February 2017 Dr Barber provided a report about the apparent use of the Lewiston land and the Burton land (Dr Barber’s first report).
On 2 May 2017 Mr Kirsanovs conducted a site inspection in company with Bhupinder and Ms Dolling of S&G. It was agreed that the works had been broadly completed in line with the agreed plan but that some further work was needed to be completed. I infer that this led to the removal of the balance of the oversize material referred to in S&G’s 31 July 2017 report referred to below.
In June 2017 the Commissioner engaged Michael Wurst to provide a report critically analysing Dr Barber’s report about the apparent use of the Lewiston land and the Burton land and addressing a number of other matters.
On 20 June 2017 Mr Wurst provided a report about the apparent use of the Lewiston land and the Burton land (Mr Wurst’s first report).
On 31 July 2017 S&G prepared an Environmental Site Condition Report. It reported the completion of the physical works required in accordance with the August 2015 Site Management Plan.
On 27 September 2017 Dr Barber provided a report in response to Mr Wurst’s first report (Dr Barber’s second report).
In January 2018 Mr Kirsanovs prepared a draft Site Contamination Audit Report. In March 2018 he prepared a draft Auditor Summary of Assessments/Clean Up Works report.
On 7 March 2018 Mr Wurst provided an addendum report in response to Dr Barber’s first report (Mr Wurst’s second report).
Partnership activities as at 2013
As at 2013, the activities of the Takhar partnership can be summarised as follows.
In Queensland, Thornlands 1 and Thornlands 2 were used to raise chickens for meat with 90,000 chickens per batch at each property and four and a half to six batches per year. Cattle were farmed on land not devoted to chicken farming.
Jaswinder was the manager of the partnership’s Queensland operations. The partnership had two full-time employees and one part-time employee working in Queensland. Jaswinder also undertook the accounting on behalf of the partnership, including preparing annual financial statements and tax returns.
In South Australia, Gawler 1 and Gawler 2 were used to raise chickens for meat with 90,000 chickens per batch at each property and six batches per year. Gawler 2 was also used to produce orchids. Land not devoted to these activities was used for broad acre cropping.
Mallala was used for broad acre cropping. Angle Vale was used to mix feed for chickens on the partnership lands in South Australia and for mixing fertiliser for use on the orchids at Gawler 2. The use of the Lewiston land and the Burton land is in dispute and is addressed below.
Bhupinder was the manager of the partnership’s South Australian operations. The partnership had three full-time employees and one part-time employee working in South Australia.
The hearing
Evidence in chief at the hearing of the appeal was adduced primarily by affidavit or written witness statement verified by affidavit, with some short supplementary oral evidence in chief.
Bhupinder and Jaswinder gave evidence. Two affidavits by Bhupinder (the first of which included voluminous exhibits and was subject to an erratum sheet) and one affidavit by Jaswinder were tendered.
The Takhars called Ms Traeger and Mr Glaser to give evidence. One affidavit by Ms Traeger and two affidavits by Mr Glaser were tendered.
The Takhars called Dr Barber to give expert evidence. Dr Barber’s two reports were tendered.
The Commissioner called Mr Olsen and Ms Humphries to give evidence. One affidavit by Mr Olsen (which included voluminous exhibits) and one affidavit by Ms Humphries were tendered.
The Commissioner called Dr Christopher Girling to give evidence. One affidavit by Dr Girling was tendered. He has owned the land at 168 Hayman Road Lewiston since 2001. His land adjoins the Lewiston land on the latter’s eastern side. He has lived in the house towards the rear of his land since 2001. He conducted his veterinary practice from that house between 2003 and 2005 and since 2005 has conducted it from separate premises at the front of his land. Dr Girling gave evidence of his observations of the Lewiston land.
The Commissioner called Stuart Dunk to give evidence concerning his inspection of the Lewiston land on 29 January 2010, 29 July 2013 and 2 July 2015. One affidavit by Mr Dunk was tendered. He was a Valuer employed by the State Valuation Office.
The Commissioner tendered an affidavit by Peter Buttery concerning his inspection of the Lewiston land on 1 November 2010, 27 October 2011, 24 October 2012, 25 October 2013, 21 October 2014 and 16 October 2015. Mr Buttery was a General Inspector/Fire Prevention Officer employed by the District Council of Mallala. He issued clean-up notices to the owners of the Lewiston land (lots 51, 52 and 53) in each year from 2010 to 2015 because he observed grass that exceeded the maximum allowable height of 10 centimetres. He made his observations from Hayman Road at the front of the property.
The Commissioner called Biagio Calarco to give evidence concerning his observations of the Burton land since January 2011. One affidavit by Mr Calarco was tendered. Mr Calarco was the State Operations Manager employed by Packcentre Marketing Services Pty Ltd (Packcentre). Packcentre has conducted its warehousing and distribution business in South Australia at 29-33 Heaslip Road Burton since January 2011. Packcentre’s property borders the Burton land in approximately its south-western corner.
The Commissioner called Kelvin Schmerl to give evidence. One affidavit by Mr Schmerl was tendered. Mr Schmerl and his brother have since about 2002 owned the land on which the warehouse leased to Packcentre is now situated. They commenced construction of the warehouse in late 2009. Approximately six tip-truck loads of soil excavated from their property was dumped on the Burton land by their contractor. Construction of the warehouse was completed in about September 2010 and the lease to Packcentre commenced in January 2011. Mr Schmerl gave evidence about observations he made of the Burton land.
The Commissioner called Colin Eldridge to give evidence concerning his kerbside inspection of the Burton land in late March/early April 2013 and other observations he made as he has passed the property. One affidavit by Mr Eldridge was tendered. Mr Eldridge was a Supervising Valuer employed by the State Valuation Office.
The Commissioner called Adam Wilson to give evidence concerning his kerbside inspection of the Burton land on 14 August 2013. One affidavit by Mr Wilson was tendered. Mr Wilson was a Property Valuer employed by the State Valuation Office.
The Commissioner called Andrew Thredgold to give evidence concerning photographs taken by him at the Lewiston land and the Burton land on 4 November 2016. One affidavit by Mr Thredgold exhibiting those photographs was tendered. Mr Thredgold was a Senior Government Investigations Officer employed by the Crown Solicitor’s Office.
The Commissioner called Mr Kirsanovs to give evidence concerning his work as an auditor in relation to the stockpiled soil on the Burton land and his observations made in June 2014 and May 2017.
The Commissioner called Mr Wurst to give expert evidence. Mr Wurst’s two reports were tendered.
Voluminous documents were tendered by both parties.
Assessment of witnesses
Bhupinder and Jaswinder

Bhupinder gave by far the majority of the written and oral evidence given by Bhupinder and Jaswinder. This is essentially because Bhupinder was responsible for the partnership’s operations in South Australia. Jaswinder was responsible for operations in Queensland which are not involved in this appeal. Jaswinder’s evidence mainly addressed accounting matters.
The majority of the evidence given by Bhupinder, and Jaswinder, was uncontentious.
The Commissioner does not make a general credibility submission in relation to the evidence of Bhupinder or Jaswinder and in particular does not make a general submission that they did not give honest evidence.
However, the Commissioner does make some specific submissions in relation to the evidence of Bhupinder, and to a lesser extent of Jaswinder, that I address at this point.
Bhupinder gave evidence that the purpose of the application for development approval to subdivide the Burton land into 66 allotments was to increase the compensation payable by the Council for the acquisition of the land for the Drainage Scheme by providing a basis for a hypothetical development method for valuation. He gave evidence that the Takhars did not have the funds to develop the land and did not intend to proceed with a subdivision. He accepted that this was a possibility in the future but said it was not the Takhars’ present intention. The Commissioner does not explicitly contend that this evidence was dishonest but invites me to reject it and find that the purpose of the application for development approval was to proceed with a subdivision. For the reasons given under the heading ‘Factual findings concerning use of the Burton Land’ below, I accept Bhupinder’s evidence in this respect.
Bhupinder gave evidence that the purpose of procuring the deposit of soils on the Burton land was to enhance the use of the land for primary production. The Commissioner does not contend that this evidence was dishonest but invites me to find that the purpose of the deposit of soils was to enable the land to be subdivided. For the reasons given under the heading ‘Factual findings concerning use of the Burton Land’ below, I accept Bhupinder’s evidence in this respect.
Jaswinder gave evidence that he and Bhupinder treated the Burton land as an asset of the partnership. The Burton land is not shown in the balance sheets of the partnership that were tendered. Jaswinder said that this was a mistake or oversight on his part as the partnership accountant. Bhupinder also gave evidence that he and Jaswinder treated the Burton land as an asset of the partnership. The Commissioner invites me to find that the Burton land was not in fact an asset of the partnership. The Commissioner contends that, if it was not a partnership asset, this is a factor that throws doubt on its having been used for the business of primary production.
In reality, it is of no significance whether the Burton land is shown as an asset of the partnership or not. Being land, it is not a depreciating asset and whether or not it is included in the balance sheet does not affect the profit of the partnership. Even if it were treated as being a personal asset of Bhupinder and Jaswinder and not an asset of the partnership, the legal characterisation would be that they allow the partnership to use it without cost. This has no effect on my assessment whether the Burton land is used for the business of primary production.
I accept Jaswinder’s evidence that he simply overlooked including the Burton land in the partnership balance sheet. Angle Vale is also not included in the partnership balance sheet even though it is clearly used by the partnership business. It is not surprising that Jaswinder overlooked including these two properties in the balance sheet because their inclusion or non-inclusion had no impact on taxation or any other specific consequence.
The Commissioner refers to the fact that Bhupinder gave evidence in his first affidavit that the application for development approval to subdivide the Burton land lapsed; whereas the letter from the Council dated 21 May 2013 shows that it was refused. However, the letter shows that the reason for the Council’s refusal was that the Takhars failed to provide a Traffic Impact Statement to the Department of Planning, Transport and Infrastructure as requested in November 2010 and June 2012 and the Department directed the Council to refuse the application pursuant to section 37(4)(bi) of the Development Act 1993 (SA). The refusal was therefore not on the merits and was consistent with Bhupinder characterising it as lapsing. In any event, Bhupinder was not cross-examined on his evidence by reference to the Council’s letter.
I asked Bhupinder and Jaswinder why they have retained the Lewiston land and the Burton land given the relatively low income derived from them compared to their capital value and why they have not instead sold them and applied the sale proceeds elsewhere. They each gave evidence to the effect that they are primary producers, they acquire land for primary production and they do not sell it. Although the Commissioner does not contend that this evidence was dishonest, the Commissioner refers to it in closing address. I accept the evidence given by Bhupinder and Jaswinder in this respect that it is their personal culture to retain land that they have purchased even though this is not to their commercial advantage. While I accept that they have contemplated the possibility in future of selling the Burton land to a developer, this is not inconsistent with a general attitude that they do not buy and sell land.
Bhupinder produced printouts from the partnership’s MYOB file showing entries in account “4-3000 Grain Sales” for the partnership’s share of grain sale proceeds between 1 July 2009 to 30 June 2013. The Commissioner contends that those records are inconsistent with grain revenue shown in the partnership’s financial statements. I reject that contention. The amounts shown in the MYOB printouts for the years ended 30 June 2011, 30 June 2012 and 30 June 2013 are identical to, and for the year ended 30 June 2013 within two dollars of, the amounts shown in the financial statements. Bhupinder was not cross-examined by the Commissioner concerning this matter.
The Commissioner contends that an analysis of the Commonwealth Bank statements for the partnership bank account between May 2012 and January 2015 shows only two entries that the Commissioner identified, both being in January 2015, as being revenue from grain. However, there is no basis on which I could find that the Commissioner identified all entries in those bank statements that represent grain proceeds. In addition, if the Commissioner were correct, the partnership received no grain revenue whatsoever in the financial years ended 30 June 2013 and 30 June 2014, which is inconsistent with Mr Krieg’s evidence. In addition, it is extremely unlikely that the Takhars overstated their revenue in the financial statements and tax returns. Finally, Bhupinder was not cross-examined by the Commissioner concerning this matter.
Overall, I accept that Bhupinder and Jaswinder were honest witnesses.
I found that Bhupinder was not accurate when giving evidence about details such as dates or quantities. He made several references to the year when something occurred that were inconsistent with objective evidence or his own evidence correcting the reference and the actual year was on occasions several years removed from the year to which he referred. Similarly, he made references to quantities that were inconsistent with objective evidence. I accept that his evidence was honest but it was not reliable about dates and necessarily reliable about quantities. I exercise commensurate caution when considering his evidence about such details. However, I accept his evidence, and the evidence of Jaswinder, concerning qualitative matters and events.
Mr Krieg
I found Mr Krieg to be a very impressive witness. He was knowledgeable about his industry and his business. He has a good memory. He gave his evidence in a straightforward and convincing manner. He was an honest and reliable witness. I accept all of his evidence.
The Commissioner explicitly accepts that Mr Krieg was a truthful witness and, apart from questioning the reliability of his recollection concerning primary production activities on the Burton land in 2013 and 2014 and on the Lewiston land in 2014, does not suggest that he was not a reliable witness.
The Commissioner refers to the fact that in his first affidavit Mr Krieg referred to ploughing the Burton land and did not refer to using a spreader to sow a crop. However, the Commissioner did not put to Mr Krieg in cross-examination that his evidence was incorrect, nor does he submit in closing address that his evidence was incorrect in this respect. Although Mr Krieg did not mention using a spreader to sow a crop in his first affidavit, given the overall content and context of his first affidavit, his not mentioning it has no significance.
Mr Krieg conducted a business partnership with members of his immediate family under the name Pine Plains. For ease of reference, I refer simply to Mr Krieg when referring to activities by his family partnership.
Mr Glaser, Ms Traeger and Mr Olsen
I found Mr Glaser to be an honest and reliable witness. There was no challenge to his evidence in cross examination. I accept his evidence.
The evidence given by Ms Traeger and Mr Olsen was uncontentious.
Dr Barber and Mr Wurst
Dr Barber and Mr Wurst gave opinion evidence that was very largely reliant on Nearmap and Google Earth aerial images together with a handful of landscape photos or Google Street View images.
Dr Barber explained that Nearmap and Google Earth images are photographs taken from planes, or other platforms, at high altitude. He said that the resolution of Nearmap images is at least twice that of Google Earth images and the clarity of Nearmap images is better. He said that images vary considerably depending on the time of day and the weather.
The Nearmap images to which Dr Barber and Mr Wurst had regard were generally of the order of two months or four months apart. They were static images.
There were therefore considerable limitations in the material available to Dr Barber and Mr Wurst to express an opinion whether land was under active management, a crop had been sown or a crop had been harvested.
In addition, both Dr Barber and Mr Wurst assumed when preparing their reports that, if the Lewiston land or the Burton land was sowed, it was done using a seeder, which would leave discernible furrows on the land. However, Mr Krieg gave evidence that he did not use a seeder on the Lewiston land or the Burton land. Instead, he used a sprayer which sprays the seeds onto the land. Dr Barber and Mr Wurst said that they had not taken this into account when expressing opinions in their reports.
In respect of most years in relation to the Lewiston land and the Burton land, Dr Barber and Mr Wurst expressed opinions based on the aerial images that confirmed the evidence given by Mr Krieg. In respect of the Burton land, Mr Krieg gave evidence that he sprayed and ploughed it in 2013 and sowed it in 2014 but Dr Barber and Mr Wurst did not discern indications of this. In respect of the Lewiston land, Mr Krieg gave evidence that he sowed it in 2014 but Dr Barber and Mr Wurst did not discern indications of this. For the separate reasons given below in relation to these instances, I have accepted Mr Krieg’s evidence.
Witnesses in respect of Lewiston
Dr Girling
Dr Girling gave evidence that in each of the years 2012, 2013, 2014 and 2015 he saw that a crop was sowed on the Lewiston land but in none of those years was the crop harvested.
Mr Krieg gave evidence that his header was able to harvest between 50 and 60 tonnes per hour and one hectare of land would generally produce between two and three tonnes. It follows that harvesting the Lewiston land would take less than one hour including entry and exit. Dr Girling may well have been unaware that Mr Krieg was harvesting the land.
Mr Krieg gave evidence that he harvested a crop on the Lewiston land in both 2012 and 2013. His evidence in this respect was supported by the opinions expressed by Dr Barber and Mr Wurst. For the reasons given below, I have accepted Mr Krieg’s evidence. I consider that Dr Girling was an honest and generally reliable witness, but he was not in a position to know whether or not the Lewiston land was harvested.
Mr Dunk
Mr Dunk gave evidence that he inspected the Lewiston land on 29 January 2010 but he did not proceed beyond the front and did not observe lot 53.
Mr Dunk gave evidence that he attended the property again on 29 July 2013 and this time drove around to the rear of the property which backs onto Morias Court. He did not walk right up to the back fence of the property. He observed no cereal growing or any other evidence of primary production. However, Mr Krieg gave evidence that he sowed a crop and this was confirmed by Dr Barber and Mr Wurst. I accept that Mr Dunk did not recognise any primary production but find that, given his distant vantage point, he simply did not recognise that it was occurring.
Mr Dunk attended on 2 July 2015 and again drove around to the rear of the property and observed it from Morias Court. He saw what may have been a crop. Mr Krieg gave evidence that, although he managed the property for crop production in 2015, he did not sow a crop and this was confirmed by Dr Barber and Mr Wurst.
I accept that Mr Dunk as a valuer of rural properties has experience in making assessments whether primary production is being undertaken. However, I find that he was mistaken in his assessment in 2013 and note that his assessment in 2015 was somewhat tentative. This illustrates the fact that evidence by persons other than experts (farmers or agricultural experts) of observations made from a distance rather than walking on the land are not necessarily reliable and great caution needs to be exercised in relation to such evidence.
Mr Buttery
Mr Buttery inspected the Lewiston land in October or November each year from 2010 to October 2015. He only made observations from Hayman Road at the front of the property and did not see lot 53.
Witnesses in respect of Burton
Mr Schmerl and Mr Calarco
Mr Schmerl gave evidence that he does not recall seeing primary production, such as growing crops or cutting hay, taking place on the Burton land but he does recall seeing green fields that may have been a field of crops or a field of weeds. He said that he visited his property approximately once every three or six months during the relevant period. It is unsurprising that he did not happen to be there when Mr Krieg was working on the property. His evidence of seeing green fields is consistent with the evidence of Mr Krieg about the work he undertook on the Burton land between 2013 and 2017.
Mr Calarco gave evidence that he did not ever see crops planted or harvested or other primary production taking place on the Burton land. He specifically said that did not see anything like a cereal crop on the Burton land in 2015 and he never noticed machinery working on the land.
However, it is common ground on appeal that at least in 2015 and 2017 a crop was sowed on the Burton land and in 2017 the crop was mowed for hay. I accept that Mr Shmerl and Mr Calarco gave honest evidence but I cannot rely on their evidence about whether a crop was sowed on the Burton land or other primary production management was undertaken on it. Again, as in the case of the evidence by Mr Dunk, this illustrates the dangers of relying on observations by non-experts from a distance.
Mr Eldridge and Mr Wilson
Mr Eldridge gave evidence that he made a kerbside inspection of the Burton land in late March/early April 2013 and it did not appear to have been cropped. This is consistent with the evidence by Mr Krieg.
Mr Wilson gave evidence that he made a kerbside inspection of the Burton land on 14 August 2013 and there was no sign that the property was used for primary production purposes (cereals or livestock). His evidence is consistent with Mr Krieg having ploughed and sprayed the property in 2013 after that date.
Mr Eldridge gave evidence that he travels along Heaslip Road at least four times every year as part of his duties as a valuer and he has never seen any evidence of primary production occurring on the property. However, it is common ground on appeal that at least in 2015 and 2017 a crop was sowed on the Burton land and in 2017 the crop was mowed for hay. I accept that Mr Eldridge gave honest evidence but I cannot rely on his evidence about whether primary production has occurred on the Burton land. As in the case of the evidence by Mr Dunk, this illustrates the dangers of relying on observations by persons other than farmers or agricultural experts from a distance.
Ms Humphries and Mr Kirsanovs
Ms Humphries gave evidence that she attended at the Burton land on 15 April and 4 June 2010. Her evidence suggests that she did not observe evidence of primary production on the land on those occasions. This would be consistent with the evidence of Mr Krieg.
Ms Humphries gave evidence that she gained an understanding from her meeting with Bhupinder and Ms Dickey that the deposit of the stockpiled soils had been for the purpose of levelling the site for future industrial development. However, by the time she gave evidence in 2018, could not recall the conversation. She did not specifically recall being told by Bhupinder and Ms Dickey that this was the intention. She did not recall reference being made to use of the land for primary production but did not categorically deny it. The intended use of the land was not relevant to her and whether it was intended to be used for primary production or industrial development did not affect her assessment about the stockpiled soils. In her letter dated 7 June 2010, Ms Dickey referred to an intention of developing the site as an industrial estate and referred to the application for development approval to subdivide the land. It is likely that Ms Humphries gained her understanding from this letter rather than from a conversation on 4 June 2010. In any event, for the reasons given below, I find that in fact the Takhars made the application for development approval for the purpose of negotiating the price of the land to be acquired by the Council and did not have an intention of developing the land for an industrial estate.
Mr Kirsanovs gave evidence that he attended at the Burton land on 4 June 2012, 20 June 2014 and 2 May 2017. He did not observe any primary production activity on the land on those occasions.
Mr Kirsanovs’ observations on 4 June 2012 are consistent with the evidence of Mr Krieg that he did not crop the Burton land in 2012. His observations on 20 June 2014 are consistent with the evidence of Mr Krieg because it is likely that he did not sow the crop that he said he sowed until after 20 June 2014. His observations on 2 May 2017 are consistent with the evidence of Mr Krieg because it is likely that he did not sow the crop that he said he sowed until after 2 May 2017. It is common ground on appeal that a crop was in fact sown, and ultimately mowed, in 2017. It is also common ground on appeal that at least a crop was sown in 2015, although Mr Kirsanovs did not in 2017 see evidence of previous primary production activity. For the reasons given below, I have accepted Mr Krieg’s evidence about his primary production activities on the land.
Mr Kirsanovs gave evidence that he was never informed by Bhupinder that the site had been used for cropping or other primary production. However, he said that he never asked Bhupinder this question. In any event, it is common ground that, since Mr Kirsanovs became involved in 2012, the Burton land has in fact been used at least in some years for primary production and hence the absence of Bhupinder mentioning it to Mr Kirsanovs has little probative significance.
Land tax regime

The Act provides that its administration and enforcement is governed, inter alia, by the Taxation Administration Act 1996 (SA) (the Taxation Administration Act) and that the two Acts are to be read together.[11]
[11] Land Tax Act 1936 (SA) section 3.
Land tax is imposed generally in respect of land in the State subject to 13 exceptions in respect of land owned by specified bodies (such as local councils) and/or used for specified purposes (such as certain charitable purposes).[12] These exceptions apply automatically when the criteria are objectively satisfied.
[12] Land Tax Act 1936 (SA) subsection 4(1)(a) to (m).
In addition to the 13 exceptions, land is exempted from land tax if the Commissioner exempts it upon being satisfied that the land falls within one of 15 categories principally by reference to the purpose of its use.[13]
[13] Land Tax Act 1936 (SA) sections 4(1)(n) and 5.
Land tax is imposed jointly and severally on the “owner(s)” of the land.[14] In the case of ordinary freehold land, “the owner” includes the legal owner of the fee simple.[15]
[14] Land Tax Act 1936 (SA) sections 14 and 16.
[15] Land Tax Act 1936 (SA) subsection 2(1) definition of owner.
Land tax is a progressive tax. In 2010/11, it ranged from 0 percent of the first $300,000 of the site value up to 3.7 percent of the site value insofar as it exceeded $1 million.[16] Thereafter, the various thresholds were subject to indexation by reference to average increases in site value. Subject to qualifications, land tax was calculated on the aggregate site value of all land owned by the taxpayer.[17]
[16] Land Tax Act 1936 (SA) section 8A.
[17] Land Tax Act 1936 (SA) subsection 8B(1).
Land tax is imposed in respect of a financial year ending on 30 June and liability to the tax arises at the commencement of the financial year.[18] Land tax for a financial year is to be calculated as at midnight on 30 June immediately preceding the financial year on the basis of circumstances then existing.[19] It is common ground that, at least where the imposition of land tax depends on whether the land is used wholly or mainly for the business of primary production, regard is not confined to use of the land on 30 June but is to be had to use before and after that date.
[18] Land Tax Act 1936 (SA) section 2 definition of land used for primary production.
[19] Land Tax Act 1936 (SA) section 4(3).
Primary production exception
One of the 13 exceptions referred to at [172] above is in respect of land of not less than 0.8 hectare[20] outside a defined rural area which the Commissioner is satisfied is used wholly or mainly for the business of primary production.[21] The Lewiston land lies outside a defined rural area and this exception is applicable to it.
[20] Land Tax Act 1936 (SA) section 2.
[21] Land Tax Act 1936 (SA) sections 4(1)(l) and 9. Defined rural areas were declared by proclamation on 26 June 1975: South Australian Government Gazette 26 June 1975, page 2457.
Section 4(1)(l) of the Act provides:
4—Imposition of land tax
(1) Taxes are imposed on all land in the State, with the following exceptions:
…
(l) land used for primary production other than such land that is situated within a defined rural area;
Subsection 2(1) defines “land used for primary production” to mean:
land of not less than 0.8 hectare in area as to which the Commissioner is satisfied that the land is used wholly or mainly for the business of primary production
and “the business of primary production” to mean:
the business of agriculture, pasturage, horticulture, viticulture, apiculture, poultry farming, dairy farming, forestry or any other business consisting of the cultivation of soils, the gathering in of crops, the rearing of livestock or the propagation and harvesting of fish or other aquatic organisms and including the intensive agistment of declared livestock.
Section 9 empowers the Governor by proclamation to declare any part of the State to be a defined rural area for the purposes of the Act and to vary or revoke such a declaration and subsection 2(1) defines “defined rural area” to mean an area declared by the Governor under section 9.
On 26 June 1975 the Governor proclaimed land falling within certain Council districts or wards (subject to some exceptions) to be defined rural areas and this proclamation was published in the South Australian Government Gazette at page 2457. In broad terms, what might be regarded as the greater or extended metropolitan areas of Adelaide and Mount Gambier were encompassed in the defined rural areas.
Accordingly, the elements of the exception created by Section 4(1)(l) of the Act are:
1the land is at least 0.8 hectare in area;
2the land is outside a defined rural area; and
3the land is used wholly or mainly for the business of primary production.
DRA primary production exemption
One of the 15 categories eligible for exemption by the Commissioner referred to at [173] above is in respect of land of not less than 0.8 hectare within a defined rural area which the Commissioner is satisfied is used wholly or mainly for the business of primary production[22] and, where the land is owned by two natural persons, one owner is engaged on a substantially full-time basis (either on their own behalf or as an employee) in a relevant business and the other owner is a relative of the first owner.[23]
[22] Land Tax Act 1936 (SA) section 5(10)(g).
[23] Land Tax Act 1936 (SA) section 5(10)(g)(ii).
Section 5 of the Act provides for full and partial exemptions from land tax. Subsections 5(1), (3) and (5) provide:
5—Exemption or partial exemption of certain land from land tax
(1)     Land is wholly exempt from land tax under this section if—
(a)     proper grounds for the exemption exist; and
(b)     such an exemption has been granted, and remains in force, under this                 section.
…
(3)     An owner of land may apply, in a form approved by the Commissioner, for an      exemption or partial exemption from land tax.
…
(5)     The Commissioner may, if satisfied that proper grounds exist for doing so, wholly or partially exempt land from land tax (whether or not an application for exemption      has been made).
Section 5(10)(g)(ii) provides:
(10)   Proper grounds for exempting land from land tax under this section exist as follows:
…
(g)     land used for primary production that is situated within a defined rural   area may be wholly exempted from land tax if—
…
(ii)     the land is owned jointly or in common by 2 or more natural   persons at least 1 of whom is engaged on a substantially   full‑time basis (either on his or her own behalf or as an   employee) in a relevant business and any other owner who is   not so engaged is a relative of an owner so engaged;
Subsection 5(13) defines a “relevant business” as follows:
relevant business—a business is a relevant business in relation to land used for primary production that is situated within a defined rural area if—
(a) the business is a business of primary production of the type for which the land is used or a business of processing or marketing primary produce; and
(b) the land or produce of the land is used to a significant extent for the purposes of that business; …
Accordingly, the elements of eligibility for the exception created by section 5(10)(g)(ii) of the Act in a case where there are two owners of the land and the relevant business is not processing or marketing primary produce are:
1the land is at least 0.8 hectare in area;
2the land is outside a defined rural area;
3the land is used wholly or mainly for the business of primary production;
4one owner is engaged on a substantially full‑time basis in a relevant business; and
5the other owner is a relative of the first owner.
Objections and appeals
Sections 82, 88(4), 92, 96, 97 and 98 of the Taxation Administration Act relevantly provide:
82—Objections
A person who is dissatisfied with—
(a)     an assessment (other than a compromise assessment); or
(b)     a decision under Part 4 concerning a refund or an application for a refund                 of tax; or
(c)     any other decision of the Commissioner under a taxation law that is not            declared to be a non-reviewable decision,
may lodge a written notice of objection with the Minister.
…
88—Determination of objection
…
(4)     The Minister may, after consideration of the objection, do one or more   of the following:
(a)     confirm or revoke the assessment or decision to which the objection                   relates;
(b)     make an assessment or decision in place of the assessment or decision                to which the objection relates.
…
92—Right of appeal
A person who has made an objection may appeal to the Supreme Court if—
(a)     the person is dissatisfied with the Minister's determination of the objection;         or
(b)     90 days (not including any period of suspension under section 88) have              passed since the objection was lodged with the Minister and the Minister has            not determined the objection and served notice of the determination on the             person.
…
96—Grounds of appeal
(1)     The appellant's and respondent's cases on an appeal are not limited to                 the grounds of the objection or the reasons for the determination of the                   objection or the facts on which the determination was made.
(2)     However, if the objection was to a reassessment, any limitation of the                matters to which the objection could relate under Division 1 applies                also to the appeal.
97—Onus on appeal
On an appeal, the appellant has the onus of proving the appellant's case.
98—Determination of appeal
On an appeal, the Supreme Court may do one or more of the following:
(a)     confirm or revoke the assessment or decision to which the appeal relates;
(b)     make an assessment or decision in place of the assessment or decision to             which the appeal relates;
(c)     make an order for payment to the Commissioner of any amount of tax that is        assessed as being payable but has not been paid;
(d)     make any further order as to costs or otherwise as it thinks just.
Section 92 does not explicitly identify the subject matter of the appeal; that is, whether the appeal is against the original assessment or decision by the Commissioner or against the determination of the objection by the Minister. However, it is apparent from section 98 that when, as in the present case, the Minister determines to disallow the objection and confirm the assessment or decision of the Commissioner under subsection 88(4)(a), it is the Commissioner’s original assessment or decision that is the subject of the appeal.[24]
[24] Conversely, it is apparent from section 98 that, when the Minister determines to make an assessment or decision in place of the assessment or decision to which the objection relates under subsection 88(4)(b), it is the Minister’s substituted assessment or decision that is the subject of the appeal.
It is common ground that, although section 92 describes the proceeding in this Court as an “appeal”, the hearing is a hearing de novo.[25]
[25] Cyril Henschke Pty Ltd v Commissioner of State Taxation [2008] SASC 360, (2008) 104 SASR 1 at [36] per Gray J. See also in the context of different legislation Tourism Holdings Australia Pty Ltd v Commissioner of Taxes for the Northern Territory [2005] NTCA 3, (2005) 15 NTLR 80 at [7]-[20] per Martin CJ and [90]-[92] per Angel J (Mildren J dissenting).
It is common ground that it is a question for this Court to determine on an objective basis whether the Lewiston land fell within the primary production exception or the Burton land fell within the criteria for a DRA primary production exemption.
Factual findings concerning use of the Lewiston land
I make the following factual findings concerning the actual and intended use of the Lewiston land (some of which are not in dispute).
To avoid ambiguity, when referring to a year when land was cropped, I refer to the calendar year when the land was sowed even if a crop was not harvested until January or February of the following year.
Position prior to 2009
Before the Takhars acquired the Lewiston land in 1993, it was used as a chicken rearing farm and hence used for primary production.
The Takhars acquired the Lewiston land for the purpose of using it for primary production.
Between 1993 and about 2004 the Takhars used the Lewiston land primarily for the production of eggs and pullets for sale.
Ms Traeger gave evidence, which was not challenged, that during the first two years while she was living in the house on the Lewiston land, the Lewiston land was cropped. This must have been either 1993 and 1994 or 1994 and 1995. Ms Traeger’s recollection was that the land was not cropped while she was living in the house after the first two years, which would encompass 1996 and 1997 and possibly also 1995.
Mr Krieg gave evidence that, as at January 2017 when he swore his first affidavit, he had been share farming cropping the Takhars’ properties for 25 to 30 years. On this basis, he had commenced share farming (taking over from Mr Lucas) by 1991. When he commenced cropping the Takhars’ properties, they had Gawler 1 and Gawler 2. They progressively acquired the Burton land, Mallala and the Lewiston land and, as they did so, Mr Krieg commenced to crop them as well.
Mr Krieg gave evidence that he share farmed all five of the Takhars’ properties: Gawler 1, Gawler 2, the Burton land, Mallala and the Lewiston land. The crops grown on the them were either grains/legumes (collectively grains) or hay. The grains commonly grown were wheat, barley, oats, durum wheat, peas, beans, lentils and chickpeas. Mr Krieg did not sow every property every year. Properties were left fallow from time to time. Mr Krieg gave evidence that all five properties were under active crop management whether they had a crop sown on them or not.
Mr Krieg managed the share farming of the Takhars’ properties in conjunction with his management of approximately 2,000 hectares of land owned or leased by his family partnership (Pine Plains) and approximately 1,000 hectares of land share farmed by Pine Plains with various landowners (including the Takhars).
Mr Krieg described the typical management of a property as follows. Over summer, after a property has been harvested where applicable, Mr Krieg controls summer weeds if there is summer rainfall. Before sowing, he spreads fertiliser and gypsum where applicable. He commences sowing on Anzac Day and generally continues until sowing is completed. Sowing can be interrupted by rainfall. Sowing might be completed as early as the end of June or as late as the end of August. If a crop is cut for hay, this is usually undertaken around late October/early November. If a crop is harvested, this usually begins in mid November (sometimes earlier, sometimes later) and continues until January or February.
Mr Krieg said that, although he was asked by Bhupinder and intended if possible to crop all of the Takhars properties (subject to deliberately leaving them fallow), it was necessary to prioritise sowing and he gave the Lewiston land lower priority than Gawler 1, Gawler 2 and Mallala due to its smaller size and its being further away. There were years when it became too late to sow the Lewiston property despite his intention to do so.
Mr Krieg said that he has a recollection whether or not he sowed the Lewiston land back to the calendar year 2010 but not before then. Accordingly, he was unable to say during which years he sowed a crop on the Lewiston land before 2010.
Bhupinder did not generally recall in which years a crop was sown on the Lewiston land. Jaswinder, being based in Queensland, did not have first-hand knowledge. The Commissioner points to the absence of a reference by Bhupinder in his dealings with the Commissioner’s office over the period up to 2009 to cropping the Lewiston land. I do not consider that this has any significant probative value because Bhupinder was not asked the question in his dealings with the Commissioner’s office.
I find on the balance of probabilities that the Lewiston land was cropped in about 1994 and 1995 and thereafter was cropped on average during approximately half of the years up to 2009.
Use of lot 53 in 2009
This was the first year the subject of the disputed land tax assessment (2009/10).
Mr Krieg gave evidence that he could not recall whether the Lewiston land was cropped in 2009. Dr Barber and Mr Wurst could not express any opinion because they had no images or photographs for this period.
Use of lot 53 in 2010
Mr Krieg gave evidence that, to the best of his recollection, he sprayed out weeds and cleaned the land in 2010 but did not sow a crop.
Dr Barber and Mr Wurst had a single Nearmap aerial image taken on 7 October 2010. They agreed that the land was not cropped in 2010. Although they observed evidence of weeds, I accept the evidence of Mr Krieg and find that he sprayed out weeds on the land earlier in 2010.
Use of lot 53 in 2011
Mr Krieg gave evidence that, to the best of his recollection, he sprayed out weeds and cleaned the land in 2011 but did not sow a crop.
Dr Barber expressed the opinion that activity for cropping had been undertaken in 2011. Mr Wurst said that the patterns were not consistent with harvesting a crop but rather of mowing the land in 2011.
I accept the evidence of Mr Krieg and find that he sprayed out weeds and cleaned the land in 2011 but did not sow a crop.
Use of lot 53 in 2012
Mr Krieg gave evidence that, to the best of his recollection, he planted a crop (which he believed was oats) in 2012.
Dr Barber had Google Earth images taken on 18 April and 2 December 2012 and 10 April 2013. He also had landscape photographs taken in 2012/13. He expressed the opinion that a crop was sown and harvested. Mr Wurst agreed that a crop was sown and harvested.
Dr Girling gave evidence that he saw a crop that had been sown in 2012; it was not harvested in October or November; he or his wife complained to the Council and subsequently someone attended and mowed the crop. Dr Girling gave evidence that he usually sowed a crop (barley or oats) on his own land (being a smaller area than lot 53), he undertook the sowing in May, he allowed his horses to strip graze on it, and he mowed it in October or November.
Mr Krieg gave evidence that his header can harvest up to 60 tonnes per hour. Harvesting a crop on the Lewiston land would be very quick. In light of the evidence by Mr Krieg, Dr Barber and Mr Wurst, I find that the crop was harvested and Dr Girling did not observe it.
I find that Mr Krieg sowed and harvested a crop in 2012.
Use of lot 53 in 2013
Mr Krieg gave evidence that, to the best of his recollection, he planted a crop (which he believed was barley) in 2013.
Dr Barber expressed the opinion that a crop was sown and harvested and that it was probably barley. Mr Wurst agreed that a crop was sown and may have been harvested.
Dr Girling gave evidence to the same effect as in respect of 2012. In light of the evidence by Mr Krieg, Dr Barber and Mr Wurst, I find that the crop was harvested and Dr Girling did not observe it.
I find that Mr Krieg sowed and harvested a crop (barley) in 2013.
Use of lot 53 in 2014
Mr Krieg gave evidence that, to the best of his recollection, he planted a crop (which he believed was barley) in 2014.
Dr Barber had Nearmap or Google Earth images taken on 27 July and 21 November 2014 and 13 March 2015. He expressed the opinion in his report that a crop was not visible in the photo taken on 27 July 2014, the photo taken on 21 November 2014 showed evidence of machinery activity likely to be the result of mowing and the photo taken on 13 March 2015 showed no evidence of harvesting. In oral evidence, however, he accepted that a crop may have been sown using a spreader (as opposed to an air seeder). Mr Wurst expressed the opinion in his report that a crop was not sown. In oral evidence, however, he accepted that a crop may have been sown using a spreader and said that he had not taken into account the possibility of use of a spreader for sowing when he prepared his report.

My finding concerning the purpose of the application for development approval and that the Takhars had no intention at that time of subdividing the land or developing it as an industrial estate does not entail that they had ruled out the future possibility of selling it to a developer to subdivide or less likely subdivide it themselves. Logically these would have been theoretical possibilities. Mr Glaser’s letter dated 13 November 2013 stated that the Burton land “will continue to be used as primary producer land, until such time in the future where a feasibility re its development may be considered”, which reflects a general contemplation by the Takhars that they might at some time act in this way. However, I find that the Takhars had no present intention of undertaking a subdivision development.
Deposit of soils
The Burton land contained a low-lying area in its south-western corner. Between July 2009 and April 2010 approximately 50,000 cubic metres of soil was deposited in this corner.
Bhupinder gave evidence that he was prompted to place an advertisement in The Advertiser newspaper for clean soil after he observed a neighbour procure soil to fill a low-lying area of their farm and grow vegetables on the filled area. He said that the purpose of procuring the deposit of the soil was to increase the productivity of the land for primary production. The Commissioner in cross-examination challenged Bhupinder’s evidence concerning his motivation.
The Commissioner refers to the fact that the deposited soils included concrete and plastic. The S&G reports indicate that this comprised only approximately five cubic metres out of a total of 50,000 cubic metres. On the basis of Bhupinder’s evidence, I find that this was the result of illegal dumping and was unintended by Bhupinder. In any event, there is no basis to consider that it would have been any more desirable for Bhupinder to obtain fill containing concrete and plastics if his purpose had been to level the land to develop it as an industrial estate than if his purpose was to level the land for primary production.
I accept Bhupinder’s evidence concerning his purpose of procuring the deposit of the soils being to enhance the use of the land for primary production. This does not entail that it was not a by-product, or secondary purpose, of the deposit that, if in the future the Takhars were to decide to sell the land to a developer or less likely subdivide it themselves, the deposit of the soil would not also facilitate that.
Ms Humphries gave evidence, summarised above, that she formed the impression that the purpose of the deposit of the stockpiled soils was for future development and did not recall mention being made of primary production. For similar reasons to those given above, this does not cause me to reject Bhupinder’s evidence about his purpose in procuring the deposit of the soils.
Instructions to cease and resume cropping
Bhupinder gave evidence that, when he received the order from the EPA in May 2010 to cease receiving the deposit of soil, he was concerned that, if the soil should turn out to be contaminated, the contaminants might have leached into the surrounding land or groundwater, which would adversely affect a crop. As a result, he instructed Mr Krieg not to crop the Burton land until the EPA issue was resolved.
Bhupinder’s evidence in this respect was not challenged in cross-examination. In addition, Mr Krieg gave evidence to the same effect. He said that he recalled that the Burton land had a problem with the EPA due to potential contamination and could not be farmed. He said that Bhupinder asked him not to farm the Burton land. Although he could not recall exactly when that was, he recalled that it was because of the EPA order. I accept the evidence of Bhupinder and Mr Krieg. I find that Bhupinder instructed Mr Krieg in May or June 2010 not to crop the Burton land as a result of the EPO and that otherwise, as a result of the opening of the Northern Expressway, Mr Krieg would have included the Burton land in the Takhar land that he intended (subject to contingencies as discussed above) to crop.
Bhupinder gave evidence that, when he was confident that the deposited soils would be retained on the Burton land, he told Mr Krieg to resume farming the Burton land. Bhupinder’s evidence in this respect was not challenged in cross-examination. In addition, Mr Krieg gave evidence to the same effect. He said that he farmed the Burton land again after Bhupinder informed him that it could be farmed.
For the reasons given below, I find that the direction by Bhupinder to Mr Krieg to resume farming was given in 2013.
Use of Burton land in 2010 to 2012
Mr Krieg gave evidence that, during the period when he was directed by Bhupinder not to crop the Burton land, which I find for the reason given below encompassed the calendar years 2010 to 2012, he left the Burton land fallow but this did not mean that he did not manage it. It was his general practice to visit all land under his management once a month. In addition, he gave evidence that he believes that he sprayed the Burton land during one or two of the years during this period. I accept that evidence.
Use of Burton land in 2013
Mr Krieg gave evidence that, to the best of his recollection, in 2013 he undertook spraying to kill weeds and ploughing on the Burton land in preparation for sowing a crop the following year.
Dr Barber and Mr Wurst expressed the opinion that the Nearmap and Google Earth images that they viewed did not indicate agricultural management such as ploughing or weeding. However, the only Nearmap images that Dr Barber and Mr Wurst had for the period between 1 April and 31 December 2013 were dated 5 April, 27 July and 16 November 2013. It is possible that Mr Krieg undertook ploughing and spraying after one of those dates and Dr Barber and Mr Wurst did not detect it on the next image. While Mr Wurst had one, and Dr Barber had several, Google Earth images over that period, as explained above, Google Earth images are at lower resolution, and provide less detailed images, than the Nearmap images.
I regard Mr Krieg as a very reliable witness. He swore his first affidavit in January 2017 at a point when he was able to work backwards in his recollection that he did not sow a crop in the previous year (2016), he sowed crops in the previous two years (2014 and 2015) and he sprayed and ploughed in the previous year (2013). Although his evidence was not confirmed by the aerial images viewed by Dr Barber and Mr Wurst, I accept his evidence that he sprayed weeds and ploughed the Burton land in 2013.
Use of Burton land in 2014
Mr Krieg gave evidence that, to the best of his recollection, he sowed a barley crop but he did not harvest it because drought adversely affected it. In an email dated 23 May 2014, he said that in 2014 the Burton land “will be cropped”. I accept that the email is only evidence of Mr Krieg’s intention as at May 2014 but evidence of his intention is probative of his likely conduct.
Dr Barber and Mr Wurst in their reports referred to Nearmap images dated 4 and 27 August 2014 showing green vegetation but no sowing lines evident and expressed the opinion that a crop had not been sowed. However, they both accepted that, if Mr Krieg used a spreader rather than a seeder, sowing lines would not necessarily be evident and they had not taken this into account when writing their reports.
Mr Wurst and Dr Barber expressed the opinion that a Nearmap image taken on 18 October 2014 showed new patterns on the land and uniform cover that evidenced management practices on the land. Although Mr Wurst expressed the opinion that this was consistent with the application of a herbicide, in light of Mr Krieg’s evidence I consider that it does not necessarily mean that a herbicide, as opposed to say a fungicide, had been applied.
Mr Krieg’s evidence was that this was the first crop sowed on the land for a substantial time (at least five years). It is not surprising that a crop sown on the land might not have the appearance typical of a crop sown more regularly.
Although Mr Wurst expressed in his report the opinion that a crop was not sown on the land, and Dr Barber did not express the opinion that a crop was sown on the land, in 2014, the evidence is not incontrovertibly inconsistent with Mr Krieg’s evidence that a crop was sown.
I regard Mr Krieg as a very reliable witness. He swore his first affidavit in January 2017 at a point when he was able to work backwards in his recollection that he did not sow a crop in the previous year (2016) but did sow crops in the previous two years (2014 and 2015). Although his evidence was not confirmed by the aerial images viewed by Dr Barber and Mr Wurst, I accept his evidence that he sowed a crop on the Burton land in 2014.
Use of Burton land in 2015
Mr Krieg gave evidence that in 2015 he sowed a durum wheat crop but he did not harvest it because the ground was too dry.
Dr Barber expressed the opinion that a Nearmap image dated 10 September 2015 showed patterns caused by mechanical equipment for the management of a crop. Mr Wurst expressed the opinion that the Nearmap image dated 10 September 2015 showed growth and distinct lines, consistent with wheel tracks from spraying and sowing a crop; and a Google Earth Street view image dated October 2015 showed a crop growing. Mr Wurst expressed the opinion that a Nearmap image dated 27 December 2015 showed the crop still present and a Nearmap image dated 6 February 2016 suggested that the crop had not been harvested.
I find that in 2015 Mr Krieg sowed a wheat crop which produced grain which he intended to harvest but ultimately he did not harvest it because lack of moisture had adversely affected the yield.
Use of Burton land in 2016
Mr Krieg gave evidence that in 2016 he planned to sow a crop and managed the land for that purpose but did not do ultimately sow a crop because the land was too wet that year.
Dr Barber expressed the opinion that the land was actively managed in 2016 for production of a crop but did not express the opinion that a crop was in fact produced. Mr Wurst expressed the opinion that the land had been sprayed for weeds at the beginning of the year but a crop was not sowed.
I accept Mr Krieg’s evidence that in 2016 he planned to sow a crop and managed the land for that purpose but did not do ultimately sow a crop because the land was too wet that year.
Use of Burton land in 2017
Mr Krieg gave evidence that in 2017 he sowed a crop and mowed it for hay. The Commissioner accepts that this occurred.
I accept the evidence of Mr Krieg and find that he sowed a crop and mowed it for hay.
General evidence
The Commissioner relies on some general evidence, sometimes relating to a specific year and sometimes more generally, suggesting an absence of primary production in a specific year, or an absence of a primary production business, on the Burton land. This includes the evidence by Ms Humphries and Mr Kirsanovs referred to at [166] to [170] above. For the reasons given, this does not cause me to doubt Mr Krieg’s evidence referred to above.
Similarly, the Commissioner refers to the fact that S&G described the Burton land as “vacant land”. It is clear from the context in their reports that they simply meant that it did not have any buildings or other improvements constructed on it and that characterising it as “vacant land” was not inconsistent with its being used for primary production. The Commissioner submits that there is an absence of a reference by S&G to the land being used for farming. There are in fact some generalised references by S&G to the land being used for farming but in any event, if their reports are so characterised, this does not cause me to doubt Mr Krieg’s evidence.
The Commissioner relies on evidence given by Mr Schmerl, Mr Calarco, Mr Eldridge and Mr Wilson. For the reasons given at [160] to [165] above, this evidence does not cause me to doubt Mr Krieg’s evidence.
Burton land issues
At [187] above the five elements of the DRA primary production exemption applicable in the present case are identified as follows:
1the land is at least 0.8 hectare in area;
2the land is outside a defined rural area;
3the land is used wholly or mainly for the business of primary production;
4one owner is engaged on a substantially full‑time basis in a relevant business; and
5the other owner is a relative of the first owner.
There is no dispute, and I find, that elements 1, 2 and 5 are established.
Element 3: use for business of primary production
It is in dispute whether the Burton land was used wholly or mainly for the business of primary production as at 30 June 2013.
There was only very limited and sporadic cropping of the Burton land up to 2009. However, there was a material change in 2010 with the opening of the Northern Expressway. I find that it was the intention of the Takhars and Mr Krieg to commence regular cropping (albeit subject to the contingencies and priorities identified by Mr Krieg in his evidence) in 2010 and thereafter. I find that it was only the intervention of the EPO issued by the EPA in May 2010 that resulted in Bhupinder directing Mr Krieg not to crop the land.
I find that in 2013 Bhupinder lifted the suspension of cropping on the Burton land and Mr Krieg undertook management of the land (including spraying and ploughing) in preparation for sowing a crop in succeeding years. It in fact transpired that he sowed a crop in 2014, 2015 and 2017 and would have sowed a crop in 2016 except that it was too wet to do so by the time it was ready to sow given his priorities.
I find that as at 30 June 2013 it was the intention and expectation of the Takhars to regularly crop the Burton land. This does not entail that they expected that it would be cropped every year and, on the contrary, it was likely that on average it would only be cropped every second year for reasons similar to those pertaining to the Lewiston land.
I find that, as at 30 June 2013, the Takhars had no intention of subdividing the Burton land or developing it as an industrial or residential estate or of using it for any purpose other than primary production. I find that they contemplated that at some point in the future they might sell the Burton land to a developer, but that was merely a speculative future possibility rather than a present intention and is incapable of comprising a competing use of the land.
It is clear that the use of land for primary production encompasses not only growing crops but activities undertaken in preparation to grow crops. In 2013 activities were undertaken by Mr Krieg in preparation to grow crops. As at the relevant date, the Burton land was used for primary production.
The Commissioner contends that the land was not used for the business of primary production because the scale of its use has been too low to amount to use for a business.
For the same reasons as in respect of lot 53 at Lewiston, the Takhars managed the Burton land as an integral parcel of five properties in South Australia on which they conducted a business of primary production. There is no doubt, and no contest, that the Takhars were and are engaged in the business of primary production as a whole. The use of the Burton land was as at the relevant date an integral part of that business of primary production. As at the relevant date, the Burton land was used for the business of primary production
For the same reasons as in respect of lot 53 at Lewiston, even if regard were confined to the Takhars’ cropping activities, there is no doubt that they comprised and comprise a business of primary production considered in themselves. The use of the Burton land was an integral part of that business of primary production. As at the relevant date, the Burton land was used for the business of primary production.
Even if the Burton land were not considered as part of an integrated business of primary production, it would still be properly regarded as being used for the business of primary production because its use is incremental to the use of Gawler 1, Gawler 2, Mallala and Lewiston for a business of primary production.
The arable area of the Burton land is 14.2 hectares and the potential revenue generated (on the basis of a yield of say 2.5 tonnes per hectare at a price of say $300 per tonne) of $10,600 per annum is modest. The income received by the Takhars on this basis would be approximately $3,000. This is a profit, albeit a modest one. It is unnecessary to decide whether, if the only primary production by the Takhars were cropping on the Burton land, this would comprise a business rather than a hobby. When regard is had to the Takhars’ integrated cropping activities over their five parcels of land in South Australia, primary production on the Burton land forms part of a business and not a hobby.
The Commissioner contends that the land was not used for the business of primary production because the arrangement with Mr Krieg was in substance an outsourcing agreement. Mr Krieg provided all services, paid for all expenses, and made all decisions, associated with cropping of the Takhars’ land. The Commissioner does not contend that this in itself negates the land being used for the business of primary production but rather that this is a factor to be weighed with all other factors.
Share farming arrangements are, on the evidence, commonplace. Subject to any issues of scale and continuity, a share farmer such as Mr Krieg carries on a business of primary production on land belonging to the owners of the relevant land. Subject to the same issues, the owners also carry on a business of primary production. A share farming arrangement is likely to be characterised legally as a joint venture, or in a minority of cases a partnership. Parties to a joint venture are generally regarded as carrying on a business, unless the joint venture itself is merely a hobby. For the purpose of characterising a joint venture as a business or a hobby, regard is had to the activities of the entire joint venture and not merely to the interest of one joint venturer. The same applies to partnerships. The mere fact that a joint venturer or a partner might only have a relatively small interest in the joint venture or partnership does not entail that the joint venturer or partner is not carrying on business. In determining whether the Burton land was used wholly or mainly for a business of primary production, it is appropriate to have regard to the entire business and not just to the 30 per cent interest of the Takhars (measured by entitlement to revenue).
In any event, even if consideration is confined to the interest of the Takhars in the farming activities on the Burton land, for the reasons given above, those activities form an integral part of the overall primary production activities of the Takhars on the five parcels of land in South Australia on which they undertake primary production and on which they grow crops.
The mere fact that Mr Krieg makes farming decisions such as what grain to sow, when to sow, what and when to harvest and so on, does not entail that the Takhars are not carrying on a cropping business on the Burton land or on their other four properties that are cropped. In joint ventures and partnerships generally, it may be the case that one joint venturer or one partner is the operator and makes the relevant operating decisions on behalf of the joint venture or partnership. This does not entail that the other joint venturers or partners are not carrying on business. Likewise, a farmer might engage an independent contractor as a manager of the farm to make the operational decisions in relation to the farming. This does not entail that the farmer is not carrying on the business of primary production on the land.
In conclusion, as at the relevant date, the Burton land was used solely for the business of primary production and the third element of the exemption is satisfied.
Element 4: Engaged full time in a relevant business

Section 5(10)(g)(ii) requires that, when two individuals are co-owners of the subject land, one must be engaged on a substantially full‑time basis in a relevant business.
The Commissioner puts one, and possibly two, contentions why this element is not established.
Business of Takhars or Krieg
The Commissioner contends in his written closing address that this element is not satisfied because, if there was a business of primary production carried out on the Burton land, that business was carried on by Mr Krieg and not by the Takhars. In oral closing address, the Commissioner puts a different contention that I have addressed above and my understanding is that this contention in the context of the fourth element is not pursued. However, I address it out of an abundance of caution.
I have already found above that the Takhars carried on a business of primary production on the Burton land notwithstanding that it was carried on under a share farming arrangement with Mr Krieg. I therefore reject the premise of the Commissioner’s argument in the written closing address. It is not necessary to consider whether, if that premise were established, it would have any effect upon the establishment of the fourth element of the exemption.
Used to a significant extent
The definition of a “relevant business” requires that the subject land be used to a significant extent for the purposes of the business of primary production in which the co-owner is engaged.
The Commissioner contends that the Burton land is not used to a significant extent for the purposes of the primary production business of the Takhars because it contributes a relatively small amount of revenue and gross profit to the overall business.
The definition by subsection 5(13) of the Act of a relevant business is as follows:
relevant business—a business is a relevant business in relation to land used for primary production that is situated within a defined rural area if—
(a) the business is a business of primary production of the type for which the land is used or a business of processing or marketing primary produce; and
(b) the land or produce of the land is used to a significant extent for the purposes of that business;
The reference to “extent” which is required to be significant is the use of the land (or produce of the land) for the purposes of the business of production, processing or marketing of primary produce in which the co-owner is engaged. This calls for an evaluation of the extent to which the land is used for the purposes of that business as opposed to being used for any other purpose. It does not call for an evaluation of the extent to which the land is used for the purposes of the business as opposed to all other inputs.
This is clear from the text and plain grammatical meaning of paragraph (b) of the definition. This is also clear from the context. The business in question might be a processing or marketing business. There might be a few properties, or very many properties, supplying the primary produce the subject of that business: this is simply not relevant to the definition of a relevant business. This element is satisfied.
The Burton land is used to a significant extent for the purposes of the Takhars’ primary production business in which Bhupinder is engaged full time. It is used for no other purpose than the purpose of that business.
Conclusion
Bhupinder was at the relevant time engaged on a substantially full‑time basis in a relevant business, being the business of primary production carried on by the Takhars. The fourth element is established.
Conclusion on Burton Land
The Takhars have established an entitlement to the DRA primary production exemption in respect of the Burton land in respect of the 2013/2014 assessment year.
Conclusion
The Takhars have established that the primary production exception applies to lot 53 in respect of the 2009/2010 to 2013/2014 assessment years.
The Takhars have not established that the primary production exception applies to lot 51 or lot 52 in respect of the 2009/2010 to 2013/2014 assessment years.
The Takhars have established an entitlement to the DRA primary production exemption in respect of the Burton land in respect of the 2013/2014 assessment year.
I will make orders allowing the appeal against the assessment and revoking the assessment. I will hear the parties about the amount of the assessment that should be substituted by reason of the imposition of land tax in respect of lots 51 and 52. I will hear the parties about costs and any other orders.